Saturday, October 25, 2008

Tom Toles and the Economy



If you haven't followed by now, Tom Toles captures it like no other.

New Tenants in the Fish Tank

I recently was "evicted" from my home office, and as part of the deal, I had to paint the walls for the new tenant, baby Allison, pink....So the nursery is all painted, and the furniture is on the way...!

However, as part of getting the nursery painted, I had to move my desk, books, and aquarium down to the basement. The desk wasn't too bad, just a piece of glass and supports, but the aquarium was another story.

Well cut to the chase, I moved the tank down by myself "successfully", which is a relative word. The tank didn't break, but moving a fish tank in general is a whole process. I drained 90% of the water (55 gallons) because I had to, and moved the fish to a holding tank. Once the tank was in place downstairs, I had to recharge the tank. I had no choice but to discard more than half the water, which has dire consequences.

When recharging the tank, I knew there would be a risk of a bacterial bloom, since bacteria in the new water, which is different from the nitrosomas, would probably go crazy with the food source in the gravel. But after watching for a day and a half, nothing, and all levels looked good. So the fish went back in. Big mistake.

I went out to run some errands and came back to see most of the fish struggling to breath in the cloudy water. I managed to save 2 of the fish, but it was a sad day. So moral of the story is, if you have to move a tank, try and save at least 50% of the water. If you can't, then keep fish in holding tank longer until bloom occurs.

The happy part of this story is that I put in some new fish. Below is a picture of the Golden Ram I saved, thank god, and I bought him a mate who you can see in the far left background.. I also got 2 Blue rams, which are smaller in size, but these cichlids from South America are quite peaceful. I also got a Syndontis, which is really cool, but he hides during the day in the rock because he doesn't like the light. Finally, got some Juli corycats. One of them is picture below as they all camped out by the bloodworm larvae in the foreground...



Thursday, October 23, 2008

The Volatility Index, the S&P500, and the Bubbles

I've posted a chart that shows the S&P500 vs. the VIX, or volatility index. The VIX is an index that represents the activity of option buying on the Chicago Board of Trade. This index is often referred to in the press as the "Fear Index". Without getting into the particulars, the VIX represents the option buying. The index trades at a higher price when option buying picks up, which is a sign that traders are trying to hedge away the risk of owning an asset (in this case, stocks.)

The S&P500 index is on the left, the VIX price is on the right. The picture tells everything, but some things to point out:

  • The VIX and the S&P are negatvely correlated. When one goes up, the other goes down
  • During the last Tech bubble ('99 - '02) the VIX had support at $20, but often traded up during the Bubble as traders worried that the IT companies like Pets.com had no real earnings, or weren't worth more than GE...
  • The VIX peaked when the Tech bubble began to burst around end of 2001
  • The VIX then traded down heavily as the Fed eased rates and kept them low to stimulate the economy. All that really happened was 3 new asset Bubbles (Credit/Housing/Corporate Earnings)
  • The S&P peaked at ~1500 during both the Tech and recent bubble.
  • The VIX is currently at 70. In relative terms, this environment we're in is far from over, at least from a market sentiment point of view. Everytime you hear someone you someone say "the bottom has formed", keep you money in stable value for a bit longer. It's where I moved our money last July '07. Probably more luck than skill, but you know what they say.
This is the chart I've been staring at for the last 2 years. The 2 bubble peaks are undeniable. The VIX is just the market catching up with what was already apparent but no one wanted to acknowledge. Sometimes it takes you-know-what to stay on the sideline even though everyone else is drinking and dancing.

I think the bottom forms when the VIX starts to stabilize around 20-30, but just my opinion. I'm in capital preservation mode.

Wednesday, October 8, 2008

Nobel Prize in Chemistry for Green Fluorescent Protein

Green fluorescent protein was isolated from the green fluorescent jellyfish, Aequorea victoria. Seems like hardly a big deal, except that today the scientists who discovered this interesting jellyfish received the 2008 Nobel Prize in chemistry for their work. What's all the fuss?

When I was a grad student at WSU in 1996 for biochemistry, I was studying telomeres and solving the structure of the ACCCT DNA motif. I was asked to present my work at the 5th annual Protein Crystallography conference at the University of Oregon that year, and was pretty nervous. But when I got there, I realized that, much like today, I was nobody. The buzz was all around the presenter after me, who had solved the structure of green fluorescent protein. It was quite a scene, and I remember asking myself what all the commotion was about.

A Glowing Jellyfish, a Nobel Prize? First, the jellyfish was found to fluoresce green, and scientists were perplexed as to why. Think about it, we see something that doesn't make sense, and we investigate as to why the jellyfish glows green. Probably some evolutionary favorable trait that allows a deep water organism to illuminate its surroundings to find food, or scare its predators.

The Structure of GFP The structure is quite elegant. Proteins are made up of amino acids that are linked together via an amide bond (N-C). There are 20 amino acids, and they are linked sequentially in different and distinct combinations to produce a long peptide polymer. Each amino acid has a different side chain, which has a certain chemistry, if you will, to it that makes each amino acid distinct. GFP is made up of 238 amino acids. If you're still with me, here's where nature's beauty "unfolds" (no pun intended.)

The 238 amino acids are linked together to form the basis for GFP protein. This "sequence" is called the protein's primary structure. Guess what? There is a secondary structure, dictated by the chemistry of the protein's amino acids' amide bonds. Since proteins are hydrophilic, or water loving, the amino acids arrange themselves to hydrogen bond in the most energetically favorable state with water molecules. That is to say, hydrogen bonds are formed with water molecules to form what is called a "beta sheet". This beta sheet can be thought of as ribbons of amino acids that stablize themselves, via structure, in water, through hydrogen bonding.

Stay with me The sequence of the 238 amino acids is GFP's primary structure. The hydrogen bonding by these amino acids with water molecules is GFP's secondary structure. So most every protein has a tertiary structure. The beta sheet of GFP folds back upon itself to form what is called a "Beta Barrel" or " Beta Can." This formation is again driven by the interaction of the protein with "itself" and the water environment. Remember, all those amino acids have distinct side chains, and these side chains have distinct chemistries. So in the tertiary structure, the protein "folds" to form a structure to make sure all of the amino acid side chains that like water face outwardly and interact with water, and side chains that don't like water are shielded from the water. So for GFP, looking at the beta barrel cartoon, the water hatin' stuff is shielded because it's located between "ribbons" and thus, shielded from water. The water loving stuff is hanging off the ribbons and interacting with the water. (I'm overly simplifying things, but you get the point I hope.) As a final note, the ribbons could have folded up into any structure, but the beta barrel is the most energy efficient structure given GFP's primary structure (sequence of amino acids). Nature is elegant, we are anything but. (Great link with pictures on protein structure here.)

Back to the GFP's Structure and its Applications If you remember nothing else, just know that the GFP is a beta barrel with a chromophore protected in the center of the barrel. The chromophore in this case is formed via an interaction between Amino acid #65 (Serine 65), Tyrosine #66, and Glycine #67 that absorbs blue light and emits green, giving GFP its green glow. Neat, but again, what's all the commotion?

Well you can create different chromophores to GFP and have the protein emit different colors of light. Think red, blue, green, yellow, etc., any wavelength that is visible. So the big picture goes like this:

  1. You can create any "fluorescence" you want, given changing the chromophore by changing amino acids 65, 66 67 or some combo of the three...
  2. You can link green fluorescent protein to other molecules....
  3. Therefore you can link green fluorescent protein variant that emits color x,y,z, etc. to any molecule...
  4. Build an detector that looks for molecule via "colored" light, and now you can do some targeted science...
A simple example is DNA sequencers. DNA is made up of A,C,T,G base pairs. Tag each molecule with blue, green, red, or yellow, and then you can determine the sequence of any DNA molecule based upon the color pattern. Link GFP to a drug that targets cancer cells, and then inject drug into biopsy matter. If drug lights up in cancerous cells, but not normal cells, bingo. The drug might or might not work, but at least you know the drug is targeting the bad cells and not the good cells. The applications are limitless.

The Nobel Prize and Basic Research So maybe my talk on ACCCT wasn't earth shattering, but compared to Mr. Yang and the others after me, it made good sense why GFP's structure was a huge deal. BTW, the "discovery" by Mr. Yang at Rice University in 1996 probably generates that university tons in royalty streams from all the chemistry kits/tools that license the technology for use.

This is a classic example of why basic research is so critical, and maybe why pharma has lost its way. Seriously, a green glowing jellyfish might someday lead to a cure for cancer. Think about that, that's awesome, and certainly worth the Nobel Prize.

The Presidential Debate - "Who won..."

The question keeps being asked, "Who won? Who won?" I watched the debate, and I continue to be thoroughly underwhelmed by both candidates. If nothing else, rather than answer the silly question that all the news channels ask, think about this. Nothing was said. Absolutely nothing, and neither strikes me as presidential. Rather than ask who won, I think what has become painfully clear is who lost. It's us; we all lose.

Maybe we are on the precipice of becoming a third world country, if not there already. As the rest of the world's income rises relative to ours going forward, who knows? Maybe innovation will arise out of those countries we used to look down upon, and maybe, if we are lucky, we'll be the low cost labor pool for the world. We better figure some things out, and stop promising entitlement programs that are bankrupting this country. If the last 8 years blew so bad, fine, but I still don't think that a symbol of change equates to a leader of change. Especially from someone we have never heard of prior to now.

In recent times, maybe that's all a president really is, a promise of change if things are bad, and a promise of status quo if things are good. But ask yourself this, where are the WMDs? There's lots of good young people making the ultimate sacrifice so we can borrow beyond our means, and no one seems to remember Colin Powell's speech to the UN General Assembly. No matter what affiliation you profess to be, you have to ask whether we are really ever told anything. As I watch this slow moving train wreck unfold, I have the distinct feeling that the rest of the world is laughing at us. I don't have the answers, but the debate left me feeling very sad about the leadership vacuum that we are about to enter into.

Tuesday, October 7, 2008

Melamine and China's Contaminated Milk

Recently, the molecule "melamine" has been in the news. It seems that babies in China are becoming sick because of this chemical, and it has been suggested that the milk in China has been deliberately tainted with the chemical. So the obvious question is why? What is the incentive to put melamine in the milk?

The best theory I've read is that the producers are trying to water down the milk. Milk has protein in it, and if you water the milk down, you dilute the protein content, thus raising the risk that the milk doesn't pass QC. Protein is made up of a carbon-nitrogen backbone, and as you can see from the structure of melamine, it has a lot of nitrogen. So if you supplement watered-down milk with melamine, QC issues are potentially solved.

If true, it's a classic example of motives gone awry. Maybe there isn't enough milk, out there in China, and maybe they do have the best intentions, but the solution to the problem seems to have created a bigger problem in that its toxic. It's the law of unintended consequences at work, and it's pretty ugly when it involves babies.

Monday, October 6, 2008

Duane and Tracy's Wedding

This weekend, Duane and Tracy tied the knot. The Lent's were married at approximately 6:00 PM this past Saturday at Penn Oaks Country Club. It was a beautiful ceremony, and the bride and groom looked stunning, as they say.

As I get older, I hate to say that it is events like these that make me realize how fast time flies, and how difficult it often seems to get together with lifetime friends. But this weekend reminded me that no matter how much time flies, true friends are always true.

Duane asked me to speak at their wedding, and I was very honored. I shared two stories about why Duane's friendship has been important to me over the 10 years I've known him. See, I had caddied for Duane for both of his Player Ability Tests (P.A.T.s) and on the first shot of his first PAT at Upper Perk, he snubbed his tee shot. This would have been equivalent to you or I riding a bike our whole life, and then one day we get on the bike, peddle once, and fall over. Duane has always killed his driver, so it was shocking. I remember looking over to see if he was about to erupt. But I think we just smiled and then laughed, and I have always admired Duane for not taking himself to seriously. A good quality to have, an even better quality to have when married.

My second great story was Duane's second PAT, at Moccasin Run, the one he passed. I've caddied a lot of PATs, and in every round, there comes a moment that tests you. For Duane, it was #5, a driveable par 4 that is lined by the road down the left hand side. Duane tags his tee shot, and it heads dead left, and all we hear is a bang. The ball hit a telephone pole and we're not really sure if it stayed in. So we walk up to the ball and finally locate it, not really knowing if it's O.B. (Out of Bounds) but there it is in a nasty lie in the rough, in play. By now the ranger is watching our group, and everyone is waiting for Duane, and you can feel the tension. All Duane does is stick his approach to within 2 feet and drains it for bird. It was restaurant quality, seriously good stuff. But what it reminded me of was that I truly believe Duane looked at his tee shot like "thank god the pole was there to keep it in" rather than "this sucks." Golf, like life, is a state of mind. Lots of us say "don't quit", but that day I got to witness a friend actually do just that. I've always admired that quality about Duane, and as I said that night, "life will always throw you crap. But I've never worried about Duane. He can handle it."

So my final thoughts that I shared that night during the walk down memory lane was that after Duane passed his PAT, I thought I'd feel relief as his caddy. But in fact, what I remember feeling was true happiness for him, because I knew how hard he had worked to get to that point in his life. There's really nothing better than seeing the people you care about experience true joy and success. And that's exactly how I felt watching he and Tracy get married Saturday night.

Congrats again Duane and Tracy!!

The Three Amigos -- A lot of golf between these three

Erin and I, before the Scotch and Sodas (me of course...)

Apparently Dancing for no one ut my laughing wife...What a Fun Wedding!

Market Meltdown -- Dow in a Freefall

Fear has complete control of the market. You had heard it here first, but as I like to tell Erin, "nobody listens to me."

You know, the Phillies are playing the L.A. Dodgers for the Division Title. Since the Cubs didn't get through, you had to know that the universe would counteract this with a destabilizing force....Well, rather than a small planet exploding somewhere, it was the market.

Link to Prior Post Titled "Has the Market Reached the Bottom?"

Thursday, October 2, 2008

Probabilities for Baseball Playoffs


Here are the probabilities for each team to win their respective playoff series...I found it on a site called "coolstandings" which ESPN cited on their website...

Link to CoolStandings Website with Playoff Probabilities



Current "Smart" Overall Probabilities
Team Divisional Championship Grand Finale
Boston 74.8% 40.7% 23.0%
Philadelphia 73.2% 38.2% 18.5%
Tampa Bay 59.9% 29.7% 15.7%
LADodgers 63.2% 29.6% 12.8%
ChiCubs 36.8% 20.7% 11.1%
ChiSox 40.1% 17.3% 8.2%
LAAngels 25.2% 12.3% 5.7%
Milwaukee 26.8% 11.5% 4.9%

Joe Pa and Penn State Football

Let me preface this post by saying that I am not part of the PSU cult. But having met my wife at Happy Valley, I kind of get to enjoy the best of both worlds. I get to make fun of the people who bleed blue and white, and yet still root as a casual fan that got his business school degree from a school that has a legend for a football coach.

So I had to post a recent commercial of Joe Paterno that is running on the BigTen network. The posted version is the longer version, but the funny part is at the end when Joe Paterno gives his recruting pitch to a prospective recruit.

This time last year, folks were calling for Joe Pa to retire, and someday he will. But you gotta love his Lions ranked at #6. Never bet against a legend.